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Machine Tool Orders Plunge in April

Bill Koenig
By Bill Koenig Senior Editor, SME Media

Machine tool orders plunged in April to their lowest level in three years, the Association for Manufacturing Technology said today.

Orders totalled $344.6 million for the month. That was down 16.5 percent from an adjusted $412.9 million in March. It was also down 18 percent from $418.4 million in April 2016.

The newest figure was the lowest April level since 2016 when orders totalled $293.2 million.

“Our members are telling us that the ready availability of products has eliminated the urgency for customers to invest in capital equipment now,” Douglas K. Woods, president of McLean, Va.-based AMT, said in a statement.

Woods also cited concerns about trade battles and tariffs.

Trade “issues raise grave concerns about the continued strength of the manufacturing sector in the near future,” he said.

President Donald Trump is waging a trade war against China. Discussions between the U.S. and China to resolve trade disputes collapsed. There’s no sign the two countries will ease up.

Trump also threatened to impose a 5 percent tariff on all Mexican goods to force that country to provide more help in stemming the flow of migrants into the U.S. The president on June 7 said Mexico had agreed to take steps and the tariffs were “indefinitely suspended.” Trump had planned to implement tariffs in 5 percent increments, reaching 25 percent by October.

‘We’re Winning’

“We’re winning,” Trump said in an interview today on CNBC, “because the tariffs are putting us at a tremendous competitive advantage.”

Tariffs are a tax on imported goods. They are paid by the companies that import products and are usually passed on to customers. They are not payments from one country to another.

For the first four months, machine tool orders slid 12 percent to $1.48 billion. The figures are based on information from companies participating in AMT’s U.S. Manufacturing Technology Orders (USMTO) program.

Machine tool orders enjoyed robust growth in 2018, posting a 19 percent gain. However, orders began to slow toward the end of the year. The trade fights have the potential to accelerate declines during the rest of 2019.

What’s more, the Institute for Supply Management said last week its manufacturing index indicated the manufacturing economy is slowing, with trade a factor. The index is considered a leading indicator, meaning it’s a sign of what is on the horizon.

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